I've just collected the tool cube in the place with all the angry spirits(?). 

I have lost all sanity 4 times so far.

I assume I should be trying to collect as much AGE as possible while also escaping, but this is one of the worst things I have ever experienced in a video game; there are so many places you can get stuck in because the tool cube blocks you, or you get blocked by enemies and rapidly drained of sanity, or the tool cube's brainless movement gets it stuck constantly - all of this results in repetitive, annoying gameplay. I was making progress and got the blue cross which seems to stop the angry purple thing from sending you back to the start, once. Then the cross starts dropping on the floor, for no visible reason. I found what looked like a candle, but walking into it gave me -1 age or sanity, I forget which. Is what I'm experiencing  the intended player experience here? Should I just keep going? Right now I have accrued 750 AGE from the colorful remains(?) all over the area, but it feels like a waste of time because I'm just going to get stuck somewhere or experience some bullshit and have to try it all over again.

The enemies of the BATTLEFIELD and indeed many other places react more aggressively towards you if you have a low FORFEND score.  You can increase your FORFEND by making and equipping various pieces of equipment at HOME.

The purple cross is a LORDSTOP which is held for 8 seconds and despawns one LORD upon contact.

(Edit: Something else I forgot, when you PULSE TOOLCUBE, it slows down LORDS hugely for a couple of seconds.  This lets you control their placement and get around them without using up the LORDSTOPS too soon.)

There are two "huts" in the BATTLEFIELD which act as RESPAWN points when you enter them.

The "candle" forms a plant and root bridge shortcut from the first hut if you spend 100 AGE to make it grow.

There's a bit over 2000 AGE in the BATTLEFIELD which can be used to finance early game activities, but it is not required that you go to the BATTLEFIELD as soon as the red door is visible at HOME, and is more likely to end up an early grave if you are not equipped sufficiently to dissuade the enemies from acting at maximum aggression.

It's worth also noting that you can typically shove enemies out of your way by spamming the USE button if they're very close, and that the TOOL CUBE can increase the efficiency with which it stays by your side by increasing its experience level with a certain item.

Edit: Last but not least, unequipping the COSH OF SELF-HATRED will send you out of a fatal corner back to your RESPAWN point.

Edit edit: I sometimes do the BATTLEFIELD with no gear (or forget to make any before I go there) and it drains my SANITY by around 700 before I've inevitably rushed through in a panic.

With some FORFEND it is a lot less hostile and you have more room to maneuver.

Thank you for the response, I'm feeling more confident and clear now. Onwards I go.

I'm glad for the feedback also, thank-you.

It's definitely a challenging game, and there are a few circumstances which could become quite untenable for the HERMIT and result in losing all your lives if your output cant outpace what is coming at you.

That said I do like to have alternate route choices or tricks built into things to ultimately give you an edge (most of the game I suppose boils down to hitting escape, enter or an arrow key at the opportune moment), and I've tried to avoid dead-ends which would lock players out of anything as much as I could.  

Many levels have little scooches you can squeeze through by hitting USE in the right location.

I tried to avoid opportunities in which one might save themselves into a corner also, so areas which are quite grueling mostly don't let you save midway so that you can't become trapped in a no-win scenario.  They are done in one shot or all is lost.

Visiting levels in different orders can sometimes prove very convenient and coincidental while just today I found a new sort of "path" through the game which I never intended and which I would have to say is very inconsiderate for the player and my hardest playtime in it yet.  Super frustrating but having done it I love it as an option.  Straight to CURSE4 before anything else, me and TOOLCUBE hanging out forever and ever and ever...

In the end I've changed the small pathetic ghosts of the BATTLEFIELD to now FLEE on TOOLCUBE PULSE, so this will hopefully go a little way to avoiding people becoming stuck in the future.

A big thank-you for bringing this to my attention.  The fix will definitely make a better HOME GAME 3 going forward.

I also filled in a couple of nooks which I thought might entrap a player too readily.

Edit: A handy thing is that if you re-install directly over the same location, your old saves still work fine.  I re-install it a few times a day and couldn't be bothered to start over that many times.

I'd encourage you to re-download the installer and install directly over your old files to try the BATTLEFIELD anew.